A couple of days ago I wrote up a cost-benefit analysis, seeking to quantify whether it made sense for my family of three to do some mileage running this fall to keep our status with Alaska Airlines. I had concluded that the value outweighed the costs, and therefore made a purely dollar-driven decision to go for it. A few comments supported my conclusion, but the majority suggested, politely, that I was nuts. I sat on this for a couple of days and have ultimately started to soften on the idea of running to maintain status.
Something Was Missing
I began looking at my analysis again, reviewing it in the context of the constructive criticism that I received:
External Risks: Status Devaluation and Partnership Changes
As Matt pointed out, elite status runs the risk of devaluation. This is more than a remote risk, too. Just this year, we’ve seen Delta and United shift to revenue-based mileage earning, as well as minimum spending requirements to have elite status at all. Meanwhile, I wrote just yesterday about American Airlines’ customer-unfriendly change to interline luggage policy. And that’s not even the only devaluation on American Airlines this year!
Alaska Airlines, the target of my mileage run, hasn’t been immune either – largely due to their Delta partnership deteriorating. Alaska elites lost luggage allowances and Economy Confort discounts on Delta in 2014, so it isn’t too much of a reach that elite mileage earning may go away in the future. Alaska’s MVP tier has also been aligned with American’s lowest Gold tier, where Main Cabin Extra seating is no longer complimentary. The MVP baggage allowance was also reduced from 2 to 1 in April, 2014. My entire value analysis was structured around spending this year in order to realize benefits next year, but what those benefits are may shift in a significant fashion. I am fairly confident that Alaska MVPs will retain a free bag on American in 2015, since the last move had to do with aligning tiers and not an adjustment to the relationship, but this does illustrate that change is happening fast and not in favor of the consumer during this period of airline consolidation.
Volatility: Travel Plans and Status Value Factors
There are two parts to my travel plans that introduce some volatility. The first is one that I mentioned in the comments – I’m schedule bound, so I can either travel on certain dates or I need to stay home. It’s not a stretch to say that some of my 9 planned trips next year will fall through, either because I needed to work instead, my wife needed to work instead, one of us doesn’t feel well enough to go, or the biggest factor that impacted us this year – sometimes we just didn’t feel like going after all. The second is more narrow, but it has to do with our Christmas travel – maybe we decide we don’t want to route through Seattle and have two really long travel days just to earn some miles. The latter is a direct risk to requalification, leading to the potential that I spend money on the first two trips and then bag the idea on the third, as the last of the sequence and the highest earning trip will be that Christmas flight. The former is a risk to the value side of my CBA, since the numbers only add up if I fly Alaska, clear a couple of upgrades and check some bags. Dropping one trip on Alaska metal reduces my expected value by as much as $900! Historically, we’ve planned more trips to San Diego than we’ve actually taken, after I looked back at my old itineraries.
Strongly correlated to the volatility of my travel plans is the fact that my value calculation relies predominantly on clearing upgrades. Miss an upgrade or skip a trip and suddenly this CBA is in the red. From a pure dollar perspective, the value of elite status is predominantly tied to upgrades, as no rational person is going to tell you they’d be loyal just for priority whatever and a seat near the front (but not in the front).
I do think I took a conservative approach with my numbers, especially the more important Alaska flights, but that doesn’t change the sensitivity of the analysis. I’m way too concentrated on clearing upgrades from a value perspective and I’m not sure that I’m as comfortable with that today as I was over the weekend.
Substitutes: Credit Cards, Buy-Ups and Other Carriers
Presuming for a moment that I fly less than planned, it’s clear that luggage allowance and priority lines/boarding/seats won’t make up for the lost value that I’d previously placed on clearing upgrades. By that same token, if I’m not an elite, there won’t be upgrades to clear, but there are some decent substitutes for bottom tier status.
Airline co-branded credit cards often include a free checked bag for everyone on the itinerary. Alaska’s does not, but American and Delta – the other two carriers tied to Alaska elite benefits – do have credit cards offering free baggage, some priority benefits and other minor discounts. If I were to elect Alaska Airlines as my airline for American Express Platinum fee reimbursement next year, that’s another two round trips with free bags. It’s fairly clear that if the amount I travel next year shrinks, I can cover the luggage and priority lanes with a credit card or three – the AA and DL cards would cover their annual fee in one trip, and I keep the American Express Platinum for its other benefits regardless.
On the Alaska flights where I’m likely to clear upgrades as an elite, it’s also somewhat likely that I can just buy the upgrade for $150 each way at check-in or at the gate. If I fly Alaska fewer than 4 times next year, I might come out ahead doing this, depending on availability. As an MVP, it’s relatively easy to clear BOS-SAN, but difficult on BOS-SEA and BOS-PDX. Worst case, I’m in coach and will still get where I’m going, right? It’s the volatility of a single factor and my travel plans coming up again.
If I’m not worried about elite status, I can also shop other carriers. While I’ve articulated reasons why Southwest isn’t feasible for me, JetBlue certainly is – Boston is a focus city with non-stops pretty much everywhere domestically, and PWM has really good feed to JFK – currently 5x daily on the E190. The upside is I’d never fly a CRJ again if I were on JetBlue. The downside is that there’d be no upgrade, free or purchased, because there’s nothing to upgrade into (unless Mint comes to Boston or I start choosing LAX over SAN, but let’s not go there).
Conclusion: Running for Status is a Huge Risk
I’m no longer sure that we’re going for it. There’s just too much riding on a single Alaska flight to tip the value from positive to negative. It’s not that I don’t want to, but it’s that circumstances may dictate that we do not. We have decided to take a long weekend and go to Portland anyway, but beyond that we’ll see if we feel like the longer routing at Christmas and another quick trip elsewhere. Worst case, if I fly next year on Alaska as much as I’m estimating now, we’ll requalify anyway. In the meantime, we can use the $2600 that would be spent on running to do something fun – it may lead to elite status anyway, but we’ll let that be a natural consequence and not the objective.